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Tax Debt Help Tips How to Settle Your IRS Tax Debt for Less

24th September 2010
By Rusty Kelly in Taxes
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The Benefits of Settling Your Tax Debt - The first and obvious benefit of settling your IRS tax debt is saving money. IRS tax debt settlements have the potential to save you thousands of dollars. Secondly, IRS settlements quickly take care of your tax debt. When you choose to pay your IRS debt in monthly payments, penalties and interest continue to accrue on the account. But when you actually settle your IRS tax debt, the tax debt does not continue to grow. It is paid off in a "lump sum".

Unless the taxpayer's financial situation changes, the account will remain on a CNC status until the tax liabilities expire. However, if the taxpayer's financial situation improves the account will be taken off of CNC status so that the IRS can collect the taxes through full payment or an Installment Agreement.

Partial payment installment agreement. With a partial payment installment agreement you will not be required to make the full monthly payment that is required with an installment agreement. This part pay alternative is available to those that cannot afford to pay the full amount and in order to do so they must prove to the IRS that they don't have the means to make the monthly payment required with the regular form of installment agreement.

Some common examples are past due notices, bills, unemployment checks, and anything and everything that serves to substantiate your financial hardship claim. Submit all of this documentation with IRS Form 656, Offer in Compromise

This method doesn't really resolve your taxes owed, but it put off collections. When you receive this status, the IRS will pause collections until you can pay. One thing to keep in mind here is that the statute of limitations is still running and the IRS has 10 years to collect back taxes from the year they were filed. If 10 years passes and they have not collected, you no longer owe that amount.

It's Just The Start of Your Road to Recovery: Getting your offer in compromise approved is only the beginning of your road to recovery. When your tax debt settlement is approved you are entering a 5 year contract with the IRS.

The IRS does this because they realize it is unlikely that the full amount will ever be collected from the taxpayer. Not surprisingly, the IRS does not take accepting a tax settlement offer lightly, and the taxpayer must demonstrate that it is in their best interest to settle rather than attempt to collect in full on the tax debt. A complete financial disclosure is required from the taxpayer, including all assets held.

The IRS will send you a notice stating they intend to levy your bank account. You bank account is now frozen. After the notice you have only 21 days before the IRS seizes your money for good. Working fast is imperative. If you set up an installment agreement or make any kind of good faith payment before the 21 days are up, you can save the money that is in your bank account, and avoid the impact of the IRS tax levy.

IRS tax audit representation and or State tax audit representation. With the help of highly specialized and trained tax relief expert who will represent your case, you have a very good chance to get IRS tax relief and or State Tax relief.
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About the Author
Samuel Landis possesses a masters degree (LLM) in addition to his law degree. He has been one of the pioneering and driving forces in IRS controversy resolution. Visit an Experienced and read more about Samuel Landis Today.
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